RusHydro and the Krasnoyarsk Regional Government Sign Memorandum on Developing the 150 MW Nizhne-Kureyskaya Greenfield Hydropower Project
JSC RusHydro (ticker symbol: MICEX-RTS, LSE: HYDR; OTCQX: RSHYY) announces the signing of a memorandum of cooperation with the Government of the Krasnoyarsk Region in developing the greenfield Nizhne-Kureyskaya hydropower plant (HPP). RusHydro's member of the Management Board Stanislav Savin and the Chairman of the regional Government Viktor Tomenko signed the document at the IX Krasnoyarsk Economic Forum.
Construction of the Nizhne-Kureyskaya hydropower plant, with an installed capacity of 150 MW, is planned in the secluded Turukhansky locality on the Kureyka River downstream from the Kureyskaya HPP. The average annual electricity generation of the plant will amount to 890 GWh. The first hydropower units will come online in 2018. The estimated cost of the project is RUR 29.8 bln (ex. VAT), including transmission infrastructure. The Company will seek project financing for the hydropower plant.
The memorandum sets out key parameters and detailed cooperation conditions between RusHydro and the regional government for developing the power station. RusHydro's participation in the project is conditioned on raising sufficient outside project financing and support from the local administration. The Government undertakes to provide all necessary assistance for the project.
Residential areas of the Turukhansky locality of the Krasnoyarsk Region are not connected to the national grid, and all electricity production is performed by diesel power plants, which supply local consumers at low tariffs subsidized by the regional budget. In 2011, the economically justified tariffs of the diesel-fired plants of JSC Turukhanskenergo amounted to RUR 22.8 per kWh (incl. VAT) for households and more than RUR 37.245 per kWh (ex. VAT) for other consumer groups; the subsidized tariff for households was set at RUR 1.06 per kWh (incl. VAT).
In August 2011, RusHydro contracted electricity output for Nizhne-Kureyskaya to a single off-taker - Turukhanskenergo. The preliminary power purchase agreement provides for a one-part selling price of RUR 16 per kWh (subject to yearly indexation) valid until December 31st, 2042. This will ensure a 15-year payback period for the project and entail a significant decrease in budget subsidies, as well as the subsitution of expensive diesel-fired generation with more efficient hydro power.
The Nizhne-Kureyskaya project is of utmost importance for the Krasnoyarsk Region and its northern territories, which suffer from a lack of efficient generation. The new hydropower plant presents a great investment opportunity with a favorable return profile.
The project has already undergone a feasibility study and public hearings on its expected environmental impact.
The information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of RusHydro. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially from these statements. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to RusHydro and its operations.
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